To be negotiable, an instrument must not be on material that lends itself to permanence

False

For an instrument to be negotiable, it need not be signed

False

A signature can consist of a word, mark, or symbol

True

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For an instrument to be negotiable, it must not contain an express promise or order to pay

False

To be negotiable, an instrument must have conditional promises attached to it

False

A statement in an instrument that payment can be made only out of a particular fund or source renders it nonnegotiable

False

A mere reference in an instrument to another writing makes the promise or order conditional

False

To be negotiable, an order to pay must be addressed to only one person

False

An instrument that promises to pay "in gold" can be negotiable

False

An instrument is not negotiable if it is not payable at a definite time

False

Any person in possession of a negotiable instrument payable to bearer is a holder

True

An instrument payable "with interest" must specify a particular rate to be negotiable

False

An undated instrument is not negotiable

False

Flik draws a check payable to "DeliMart" to buy groceries. Flik's check is most likelya. a certificate of depositb. an order to payc. a promise to payd. a promissory note

b. an order to pay

To obtain office supplies for DMC, Elmo executes a draft in favor of Flynn. A draft isa. a conditional promise to pay moneyb. an unconditional written order to pay moneyc. a qualified promise to set aside a sum of moneyd. a restricted promise to deliver goods at a future date

b. an unconditional written order to pay money

BNC Cafe issues an instrument in favor of ESI. For the instrument to be negotiable it musta. be a conditional promise or order to payb. be payable on demand or at a specific timec. be signed by the payeed. recite the consideration given in exchange for it

b. be payable on demand or at a specific time

To finance the purchase of a house from Tina, Uri signs an instrument promising to pay to VMS $160,000 with interest installments with the final payment due July 10 2042. To be negotiable, this instrument must include he signature ofa. a non-party witnessb. Tina or Tina's realtorc. Urid. VMS's chief financial officer

c. Uri

Ryan signs an instrument using an "R" with a circle around it. With this mark for a signature, the instrument isa. negotiableb. nonnegotiable, because an initial does not state the signer's namec. nonnegotiable, because it includes the specific date of a contractd. nonnegotiable, because it refers to an express contract

a. negotiable

Jack signs an instrument that states it is being executed "as per a contract for the sale of three magic beans dated June 1." This instrument isa. negotiableb. nonnegotiable, because banks cannot easily process commoditiesc. nonnegotiable, because it includes the specific date of a contractd. nonnegotiable, because it refers to an express contract

a. negotiable

Kelly signs an instrument in favor of Leo that states it is "subject to a certain agreement between Kelly and Mona". This instrument isa. negotiableb. nonnegotiable, because it is made subject to a separate agreementc. nonnegotiable, because it refers to a separate agreementd. nonnegotiable, because Kelly and Mona are not the same persons

b. nonnegotiable, because it is made subject to a separate agreement

On behalf of DCC, Elvin signs an instrument in which he promises to deliver 1,000 feet of optic fiber cable to Financiers eBank on march 1. This instrumenta. negotiableb. nonnegotiable, because cable is not a medium of exchange authorized or adopted by a government as currencyc. nonnegotiable, because it does not indicate a specific type of cabled. nonnegotiable, because it does not recite any consideration

b. nonnegotiable because cable is not a medium of exchange authorized or adopted by a government as currency

Rainey signs a promissory note for $10,000 in favor of SU. The more is undated but specified that it is "payable one month after date". This note isa. negotiableb. nonnegotiable, because one month is not a reasonable timec. nonnegotiable, because there is no option to pay earlyd. nonnegotiable, because the maturity date cannot be determined from the face of the instrument

d. nonnegotiable, because the maturity date cannot be determined from the face of the instrument

On May 1, Doug signs a check that is payable to the order of ECC and that is dated July 1. This check isa. negotiableb. nonnegotiable, because it is payable to a corporationc. nonnegotiable, because it is postdatedd. because it is signed by the drawer

a. negotiable

Under the UCC, a transfer of rights under a contract is a negotiation

False

An order instrument is negotiated by delivery with any necessary indorsement

True

Negotiation is a transfer in such form that the transferee becomes a holder

True

A negotiable instrument can only be transferred by negotiation

False

A person who receives an instrument as a gift normally becomes an ordinary holder

True

A holder does not take an instrument for value if he or she gives a negotiable instrument as payment

False

An instrument is not defective simply because it is overdue

False

If a person purchasing an instrument does not know and has no reason to know tha it has been dishonored, the person cannot become an HDC

False

Any irregularity on the face of an instrument that calls into question its validity will bar HDC status

True

A person who accepts an instrument that has been completed without knowing that it was incomplete when issued can take it as an HDC

True

Ollie negotiates an order instrument to Phil bya. assignment of its rights under a contractb. delivery with any necessary indorsementc. making an unconditional promise to payd. presenting it in response to a demand by B

b. delivery with any necessary indorsement

Lauren transfers an instrument to Miguel in a form and by a means that makes Miguel a "holder". This isa. a holdingb. an assignmentc. negotiationd. presentment

c. negotiation

Petra signs a check payable to Quincy, who indorses the back, gives it to RCU, and receives cash. The transfer of the check from Quincy to the credit union isa. an assignmentb. a negotiationc. a paymentd. sale

b. a negotiation

Ivy signs a check payable to Jon and gives it to him. Jon indorses the back, and transfers the check to Ked. To negotiate the check to Luis, Ked musta. write "Ked" on the backb. write "pay to the order of Luis [signed] Ked" on the backc. deliver the check to Luisd. obtain Luis's signature on the back

c. deliver the check to Luis

Rollo obtains a check payable to his order from Simone. Rollow signs the back and gives the check to Trey. Trey writes "Pay to Trey" above Rollo's signature. When Trey writes "Pay to Trey" above Rollo's signature, Rollo's signature becomesa. a blank endorsementb. a qualified indorsementc. a special indorsementd. a restrictive indorsement

c. a special indorsement

Rollo obtains a check payable to his order from Simone. Rollow signs the back and gives the check to Trey. Trey writes "Pay to Trey" above Rollo's signature. When Trey writes "Pay to Trey" above Rollo's signature, the check becomesa. a bearer instrumentb. an order instrumentc. a promissory noted. a nonnegotiable instrument

b. an order instrument

Rollo obtains a check payable to his order from Simone. Rollow signs the back and gives the check to Trey. Trey writes "Pay to Trey" above Rollo's signature. By writing "Pay to Trey" above Rollo's signature, Treya. avoids the risk of loss from theft of the instrumentb. relieves himself from liability on the instrumentc. converts the check into a nonnegotiable instrumentd. locks the instrument into the bank collection process

a. avoids the risk of loss from theft of the instrument

Rollo obtains a check payable to his order from Simone. Rollow signs the back and gives the check to Trey. Trey writes "Pay to Trey" above Rollo's signature. After Trey writes "Pay to Trey" above Rollo's signature, further negotiation of the check.a. requires Rollo's re-indorsement and deliveryb. requires delivery alonec. requires Trey's indorsement and deliveryd. is not possible

c. requires Trey's indorsement and delivery

Tiffany transfer a draft by signing it and delivering it to Uma. Tiffany isa. an indorsesb. a draft dodgerc. a drafterd. a promisor

a. an indorser

Velma transfers a note by signing it and delivering it to Woz. Woz isa. a delivery personb. an indorseec. a note passerd. a promisee

b. an indorsee

Mike receives a payroll check from NCS and indorses it by signing his name on the back of the check. This isa. a blank indorsementb. a qualified indorsementc. a restrictive indorsementd. a special indorsement

a. a blank indorsement

Dora receives a check from Eagle corporation. Dora indorses the check to FNB by writing "pay to FNB" only and signing her name. This isa. a blank indorsementb. a qualified inorsementc. a restrictive indorsementd. a special indorsement

c. a restrictive indorsement

Gina writes and signs a check payable to "Happy Market". Ira, Happy's manager, indorses the check "For deposit only". This isa. a blank indorsementb. a qualified indorsementc. a restrictive indorsementd. a special indorsement

c. a restrictive indorsement

To pay for investment advice from financial consultants Smith and Jones, Tony signs a check payable to "Smith or Jones". A proper indorsement of the check isa. not possibleb. "Smith" and "Jones" onlyc. "Smith" only, or "Jones" only, but not "Smith" and "Jones"d. "Smith" only, or "Jones" only, or "Smith" and "Jones"

d. "Smith" only, or "Jones" only, or "Smith" and "Jones"

Blythe, an accountant for C&D, acquires a negotiable instrument from Eton by promising to pay its face value in thirty days. Blythe acquires the status of an HDC when shea. acquires possession of the negotiable instrumentb. agrees with Eton to buy the negotiable instrumentc. pays the face value due on the instrumentd. transfers the instrument to another party

c. pays the face value due on the instrument

Jen makes a gift of a check to Kilroy who takes it in good faith and without notice of any claim, defense, or defect. With respect to this check, Kilroy isa. an extraordinary holder in due courseb. an ordinary check passerc. an ordinary holderd. an ordinary holder in due course

c. an ordinary holder

Jill, in good faith and for value, gets from Kit a check "payable to the order of bearer". Jill does not know that Kit stole the check. Jill isa. an HDCb. not an HDC, because Kit did not acquire the check for valuec. not an HDC, because Kit did not acquire the check in good faithd. not an HDC, because the check is a bearer instrument

a. an HDC

Florencia, who is not a GB customer, attempts to cash a check drawn on the bank. The check is considered dishonored if GBa. refuses to pay itb. charges a fee to cash itc. asks Florencia for reasonable identificationd. asks Florencia to sign a receipt for the payment on the check

a. refuses to pay it

Bob receives a check from Chris. Without Bob's knowledge, Dan indorses it in his own name and deposits it in his account at ECB. In Bob's subsequent suit against the bank for the money, the court will most likely rule in favor ofa. Bob, because Dan's signature is not authorizedb. Bob, because ECB is not a holder in due coursec. ECB, because Dan's signature is not authorizedd. ECB, because it is a holder in due course

a. Bob, because Dan's signature is not authorized

Clem gets a $100 check as a gift from Daria. Clem crudely increases the amount of the check to $1000 - the alteration is obvious - and transfers it to eReady, in exchange for a TV. eReady deposits the check in its bank account at FTB. HDCs of this check includea. Clem, eReady, and FTBb. Clem onlyc. eReady and FTB onlyd. none of these parties

d. none of these parties

A signature can be made by use of any device or machine

True

Signature liability is contingent liability

True

A drawer's liability does not arise until presentment and notice of the dishonor

True

Dishonor occurs if payment of an instrument is refused with the prescribed time

True

An authorized agent binds a principal on an instrument if the agent clearly names the principal in the signature

True

An unauthorized signature binds the person whose name is signed

False

Transfer of an order instrument by indorsement and delivery extends warranty liability to any subsequent holder who takes the instrument in good faith

True

A person whose name is forged on an instrument is liable to pay only a holder in due course the value of the forged instrument

False

Personal defenses are used to avoid payment to an ordinary holder of a negotiable instrument, but not to an HDC or a holder through an HDC

True

Destruction or mutilation of a negotiable instrument by accident discharges it

False

Ethel signs a note "payable to the order of Fidelity". Fidelity indorses the note in blank and negotiates it to Ghani, who sells it to Huck. Liability associated with the transfer of the note from Ghani to Huck isa. fitnessb. qualityc. signatured. warranty

d. warranty

Toby signs a note "payable to the order of UCU." Unless Toby has a valid defense against payment, Toby's liability on this note ita. immediateb. imposed only after payment is demandedc. postponed until the note is dishonored by UCUd. suspended until payment is due

a. immediate

Derby writes a check to Extendo, that is drawn on Derby's account at Farm and Ranch. If the bank does not accept the check, liability for its amount is ona. Derbyb. Extendoc. Farm and Ranchd. the holder of the check

a. Derby

Nero signs a check "pay to the order of Olive" drawn on Nero's account in Peachtree Bank. Olive signs the back of the check. Secondary liability on this check extends toa. Nero and Olive onlyb. Nero and PB onlyc. Nero onlyd. PB only

a. Nero and Olive only

Dirk is the maker of a note, on which Erv is secondarily liable. FCC is the current holder of the note. Erv will be obligated to pay the note ifa. Dirk defaults on the noteb. FCC breaches a transfer warrantyc. FCC negotiates the note to a third partyd. FCC presents the note for payment

a. Dirk defaults on the note

Seymour writes a check on his account at P Bank to Teri to pay a debt. Teri negotiates the check by indorsement to Rosanna, who presents it for payment to O Bank. Teri isa. not liable for payment under any circumstancesb. primarily liablec. secondarily liabled. simultaneously liable

c. secondarily liable

Seymour writes a check on his account at P Bank to Teri to pay a debt. Teri negotiates the check by indorsement to Rosanna, who presents it for payment to O Bank. If O Bank dishonors the check, Rosanna can obtain payment from Teria. if Rosanna timely notifies Terib. only if Seymour refuses to pay the checkc. under any circumstancesd. under no circumstances

a. if Rosanna timely notifies Teri

To borrow the money to buy a car, Klaus signs a note "payable to the order of LCAF". Minnie cosigns the note to guarantee the repayment of the loan. Minnie's liability on this note isa. lateralb. primaryc. secondaryd. tertiary

b. primary

Celia, an employee of DDC, forges the signature of Elin, DDC's president, on a DDC check and cashes it at First Bank. Elin would Ratify Celia's actions bya. asking First to prosecute Celia for forgeryb. discharging Celia from DDC's employmentc. entering into a repayment agreement with Celiad. filing criminal charges against Celia herself

c. entering into a repayment agreement with Celia

Birdie, an accountant for CCF, issues company checks payable to nonexistent persons drawn on CCF's account at Debit Bank. Birdie indorses the checks and deposits them in her account. CCF discovers the theft and demands that Debit recredit its account. Debit's best defense is thata. Birdie wasn't authorized to issue the checksb. CCF was in a better position than Debit to prevent the theftc. Debit din't know that the checks were not to be paidd. the checks were the property of CCF, not Debit

b. CCF was in a better position than Debit to prevent the theft

Rodeo Ranch's agent Slim is authorized to write checks on Rodeo's account in Town Bank. URC is a Rodeo supplier. Slim writes check on Rodeo's account "pay to the order of URC [signed] Slim", indorses it in URC's name, and deposits it in his own account in Verity Bank. If Verity collects payment, the ultimate party most likely to suffer the loss isa. no oneb. Rodeo Ranchc. Town Bankd. URC

b. Rodeo Ranch

Cash National Bank is an HDC of a note for $1000, on which there is the forged signature of "Dudle". If sued on the note by Casha. Dudley must pay the noteb. Dudley's best defense would be fraud in the executionc. Dudley's best defense would be material alterationd. Dudley's best defense would be forgery

d. Dudley's best defense would be forgery

Opa asks Paul, who doesn't understand English, to sign what Opa says is an application to open a bank account. In fact, the "application" is a note. If sued on the note by an HDCa. Paulo must pay the noteb. Paulo's best defense would be fraud in the executionc. Paulo's best defense would be fraud in the inducementd. Paulo's best defense would be mistake

b. Paulo's best defense would be fraud in the execution

Chris convinces Dion, who does not understand English, to sign a $1000 note that Dion believes is an application for a credit card. Chris negotiates the note to EZ. Diona. can avoid payment on the note even if EZ is an HDCb. can avoid payment on the note only if EZ is a holderc. must pay EZ the amount that is paid for the noted. must pay the note in full

a. can avoid payment on the note even if EZ is an HDC

DLFS borrows $100,000 at 6% interest from ELC and signs a promissory note for that amount. ELC changes the amount of the note to $120,000 and increases the rate to 8%. ELC materially altered the note when it changeda. neither the amount not the interest rateb. the amount and the interest ratec. the amount onlyd. the interest rate only

b. the amount and the interest rate

Quincy signs a check payable to Richland and gives it to Richland, leaving the amount blank but authorizing Richland to fill in the check for $1,000. Richland fills in $1,500 and negotiates the check to Silverado Bank, to whom Richland owes $1,500. Silverado, an HDC, can enforce the check fora. $0b. $500c. $1,000d. $1,500

d. $1,500

LAC gives a $3,000 promissory note to MDS to deliver a load of computer chips to LAC's plant. The chips are contaminated during transit, and are useless to LAC on delivery. If MDS present the note for paymenta. LAC's best defense would be breach of warrantyb. LAC must pay the notec. LAC's best defense would be nondelivery of an instrumentd. LAC's best defense would be failure of consideration

a. LAC's best defense would be breach of warranty

Bing sings a note payable to the order of Cameron. Cameron indorses the note and gives it to Daphne as a payment for a debt. Daphne presents it to Bing, who pays it. Bing's payment dischargesa. all of the partiesb. only Bingc. only Camerond. only Daphne

a. all of the parties

Puck signs a check "pay to the order of Quik Mart" drawn on Puck's account in Regional Bank. Puck shows the check to Silky, who agrees that the signature is Puck's and that QM is owed the amount that the check represents. QM signs the back of the check. Liability on this check extends toa. Pucks, QM, and Regional Bankb. Puck and QM onlyc. Puck and Silky onlyd. Silky only

b. Puck and QM only

ASC's agent Bailey is authorized to draw checks on ASC's account in Citizen Bank. The checks are preprinted with the company name. Bailey writes a check "pay to the order of Darlene [signed] Bailey." Darlene presents the check for payment. If Citizen Bank dishonors it, liability extends toa. no oneb. ASC and Baileyc. ASC onlyd. Bailey only

c. ASC only

Quincy signs a check payable to RII and gives it to RII, leaving the amount blank but authorizing RII to fill in the check for $1000. RII fills in $1500 and negotiates the check to Silverado Bank, to whom RII owes $1500. Silverado Bank, an HDC, can enforce the check fora. $0b. $500c. $1000d. $1500

d. $1500

A certified check is an instrument that has been accepted for payment by the bank on which it is drawn

True

A drawer is liable to the holder of a check if the check is not honored

True

Only a customer or a person authorized to draw on an account can order a bank not to pay a check when it is presented for payment

True

A customer can escape liability for failing to notify the bank of forged or altered checks when the customer can prove that the bank was negligent

True

A bank that pays a customer's check bearing a forged indorsement is not obligated to recredit the customer's account

False

If a bank fails to detect an alteration on a customer's check, it is liable to its customer for the loss

True

Any local check deposited must be available for withdrawal by check or as cash within one business day from the date of deposit

True

The first bank to receive a check for payment is the intermediary bank

False

A customer has two days to discover and notify the bank of any error on the monthly statement involving an electronic transfer of funds

False

No financial institution can disclose nonpublic personal information about a consumer to an unaffiliated third party under any circumstances

False

Rikki signs a check "pay to the order of Scholar University" drawn on Rikki's account in State Bank to pay her tuition. Rikki isa. the certifierb. the draweec. the drawerd. the payee

c. the drawer

Elmo pays First National Bank $1000 plus a service fee to draw a check on itself made payable to GDS. This isa. a cashier's checkb. a certified checkc. a trade acceptanced. a traveler's check

a. a cashier's check

Scott presents an instrument that states "pay to the order of Scott" to Town Bank for payment. This instrument is the most common type of negotiable instrument, which isa. a certificate of depositb. a checkc. a noted. a trade acceptance

b. a check

First Community Bank agrees to accept a check by setting aside sufficient funds to cover the amount. This check is considereda. cashedb. certifiedc. depositedd. provisionally credited

b. certified

Kareem writes a check for $1000 drawn on Liberty Bank and presents it to Maris. Maris presents the check for payment to Liberty Bank, which dishonors it. The party most likely liable to Maris isa. Kareem in a civil suitb. Kareem in a criminal suitc. Liberty Bank in an administrative proceedingd. the Federal Reserve

a. Kareem in a civil suit

Thelma signs a check "pay to the order of Uri" drawn on Thelma's account in Verity bank. Thelma has $400 in her account but the amount of the check is $500, which the bank pays. This isa. a dishonored checkb. an overdraftc. a postdated checkd. a stale check

b. an overdraft

Liu signs a check "pay to the order of Marv" drawn on Liu's account in National Bank. Liu later orders National not to pay the check, but the banks pays it over Liu's order. Subsequent checks written on Liu's account "bounce." Most likely liable for the costs to Liu isa. any party to whom a subsequent check was writtenb. Liuc. Marvd. National

d. National

Darwin signs a check "pay to the order of Eva Marie" drawn on Darwin's account in First Funds Bank and dates the check "April 1." Eva Marie presents the check to the bank for payment on November 12. This isa. a stop-payment orderb. an overdraftc. a postdated checkd. a stale check

d. a stale check

Shakira issues a check drawn on Thrifty Banks to UOS to pay for six computer desks. Later, Shakira discovers defects in the goods and orders Thrifty to stop payment on the check. Shakira does not renew the order, and the bank clears the check eight months later. The banka. must recredit Shakira's accountb. must obtain funds from UOS to cover the amount of the checkc. must substitute acceptable goodsd. need not credit Shakira's account

d. need not credit Shakira's account

Johnny writes a check to Katie as payment for a DVD player but soon discovers the player is broken. He goes to the drawee bank and orally authorizes Sissy, a bank officer, to stop payment on the check. This order is valid fora. fourteen daysb. fourteen monthsc. six daysd. six months

a. fourteen days

Brandy forges Caleb's signature on a check "payable to the order of Brandy" drawn on Caleb's account in Delphi Bank. Caleb's forged signature isa. effective if an innocent third party accepts the checkb. effective to the degree that it matches Caleb's genuine signaturec. effective to the extent that Downtown bank debit's Caleb's accountd. not effective

d. not effective

Elmer can write checks on his account at Finance City Bank. Gina steals the checks, forges Elmer's signature, and cashes the checks at Finance City. The bank is excused from any liability if, after receipt of the first forged check, Elmer fails to report the forgeries withina. five daysb. fourteen daysc. one yeard. three years

c. one year

Drew signs a check "pay to the order of Eppie" drawn on Drew's account in Fidelity Bank. Greta forges Eppie's indorsement. Fidelity pays the check. Most likelya. Drew will be liable for the amountb. Eppie will have to pay Drew for the amountc. Fidelity will have to recredit Drew's accountd. the Federal Reserve will reimburse all parties for their costs

c. Fidelity will have to recredit Drew's account

Roald writes a check for $700 to Savannah. Savannah indorses the check in blank and transfers it to Twitchell, who alters the check to read $7000 and presents it to Union Bank, the drawee, for payment. The bank cashes it. Roald discovers the alteration and files a suit against the bank. Roald can recovera. $7000b. $6300c. $700d. $0

b. $6300

On Monday morning, Bob deposits into his account at County Bank a $500 check from Dyna, who also has an account at County Bank. On that same day, this check is considereda. cashieredb. certifiedc. paidd. provisionally credited

d. provisionally credited

S&J Associates is a business customer of Superior Bank. Under federal law, S&J cannot demanda. any proof of payment except Superior's good faithb. monthly statementsc. recrediting of its account on payment of a forged itemd. the return of its original checks with its monthly statements

d. the return of its original check with its monthly statement

Mike loses his National Bank access card. He realizes his loss the next day but waits a week to call National. Meanwhile, Opal finds and uses Mike's card to withdraw $3000 from Mike's account. Mike is responsible fora. $0b. $50c. $500d. $3000

c. $500

Mike loses his National Bank access card. He realizes his loss the next day but waits a week to call National. Meanwhile, Opal finds and uses Mike's card to withdraw $3000 from Mike's account. When Mike receives his National statement, he demands that the bank investigate the matter and recredit his account. The banka. has no duty to investigateb. must investigate and, if the dispute is not resolved within 10 days, recredit Mike's account (at least until the dispute is resolved)c. must investigate and immediately recredit MIke's account (at least until the dispute is resolved)d. must investigate but need not recredit Mike's account

b. must investigate and, if the dispute is not resolved within 10 days, recredit Mike's account (at least until the dispute is resolved)

Paris knowingly divulges to ME magazine information about Randy's e-money payments to City Bank, without the consent of Randy or city Bank. Paris may be in violation of federal lawa. if the e-payments were in transmission at the timeb. if the e-payments have not yet been madec. if the e-payments are not represented by paper checksd. under none of these circumstances

a. if the e-payments were in transmission at the time

eBank, an online financial institution, gives financial information about Frieda and other customers to a federal agency. eBank may be in violation of federal lawa. if the agency did not have a warrantb. if the institution is not deemed to be a bankc. if the institution did not issue its customers credit or debit cardsd. under non of these circumstances

c. if the institution did not issue its customers credit or debit cards

The person who signs or makes an order to pay is the drawer

True

A negotiable instrument serves as a substitute for money

True

A bearer instrument is payable to whoever possesses it

True

To be negotiable, an instrument must be in writing

True

An instrument can be negotiable even if it is not payable on demand or at a definite time

False

An instrument including a clause that permits the date of maturity to be extended by the maker for "no more than a reasonable time" is negotiable

False

An instrument payable to the order of a specific person is not negotiable

False

To be negotiable, the terms of a promise or order must be included on the instrument

True

To be negotiable, an instrument must include an unconditional promise to pay

True

An instrument is not negotiable if reference must be made to foreign exchange rates when payment is due

False

Dieter makes out an instrument that states he promises to pay $600 and gives it to Erica. To be negotiable, this instrument musta. be payable to order or to bearerb. be signed by the payeec. contain references to all agreements between the partiesd. contain necessary conditions of payment

a. be payable to order or to bearer

Craig signs a promissory note payable to the order of DLC. The note states simply that it is payable "with interest." This note isa. negotiableb. nonnegotiable, because it does not specify a particular rate of interestc. nonnegotiable, because it is payable to a specific partyd. nonnegotiable, because it states only that it is payable "with interest"

a. negotiable

Oberon makes out a check "Pay to the order of bearer." This isa. a bearer instrument and an order instrumentb. a bearer instrument onlyc. an order instrument onlyd. non of the choices

b. a bearer instrument only

To pay for a new truck, Tri-State issues a draft in favor of Uno. A draft isa. a conditional promise to pay moneyb. an unconditional written order to pay moneyc. a promise to pay moneyd. a promise to deliver goods at a future date

b. an unconditional written order to pay money

Loren writes a check for $100 payable to Jana on Loren's account at Corn County Bank. Loren isa. the draweeb. the drawerc. the holderd. the payee

b. the drawer

To pay for an office building, Keysha executes a negotiable instrument in favor of Leah. They are the only two parties to the instrument. this isa. a certificate of depositb. a checkc. a draftd. a promissory note

d. a promissory note

MMI issues an instrument in favor of NCC. To be negotiable, the instrument need nota. be an unconditional promise or order to payb. be payable on demand or at a specified timec. be signed by MMId. recite the consideration given in exchange for it

d. recite the consideration given in exchange for it

Riza executes an instrument in favor of Pauline. For the instrument to be negotiable, Riza's signaturea. may be anywhere on the instrumentb. must be in the lower right hand cornerc. must be on the backd. must not be on the instrument

a. may be anywhere on the instrument

QPI signs an instrument payable to RDI that includes the notation "as per contract." This instrument isa. negotiableb. nonnegotiable, because an obligation with respect to it is stated in other writingc. nonnegotiable, because it is governed by another writingd. nonnegotiable, because it states a condition to pay

a. negotiable

Timor signs a check payable to VVC. The check does not include a date. This check isa. negotiableb. nonnegotiable, because it does not include a datec. nonnegotiable, because it is payable to a specific partyd. nonnegotiable, because it is signed by its issuer

a. negotiable

A holder in due course takes a negotiable instrument free of most defenses and claims to it

True

Indorsements are required to negotiate order instruments

True

A promise to give value in the future makes a holder an HDC

False

Indorsements are required to negotiate bearer instruments

False

Every person who possesses an instrument is a holder

False

For HDC status, good faith means "honesty in fact and the observance of reasonable commercial standards of fair dealing"

True

A holder has only those rights that his or her transferor had in the instrument

True

All claims to an instrument can be successfully asserted against an HDC

False

Taking a check knowing that the drawee dishonored it prevents a holder from becoming an HDC

True

A holder who has knowledge of a defense against payment on an instrument can become an HDC

False

Ferris signs and delivers to Erin a $5000 negotiable note payable to "Erin or bearer." Erin negotiates to Grendel, indorsing it on the back by signing "Erin." The note is nowa. a bearer instrument, and Grendel can convert it to order paper by writing "Pay to the order of Grendel" above Erin's signatureb. a bearer instrument, and it cannot be converted to an order instrumentc. an order instrument, and it cannot be converted to a bearer instrumentd. a nonnegotiable instrument

a. a bearer instrument, and Grendel can convert it to order paper by writing "Pay tot he order of Grendel" above Erin's signature

Ollie makes out a check "Pay to the order of Paco." Paco indorses the check on the back. The check can now be negotiated bya. delivery onlyb. indorsement onlyc. only delivery and indorsementd. neither delivery nor indorsement

c. only delivery and indorsement

Leah accepts a promissory note from Mikayla. for Leah to be a holder in due course of the notea. all prior holders must have HDCsb. Leah must be the payee of the notec. the note must be negotiabled. the note must be "Payable to Bearer"

c. the note must be negotiable

Babe writes out a check for $500, but does not specify a payee. Ciara steals the check and makes it payable to herself. She negotiates the check to Debra, who takes it in good faith and without notice. Regarding payment, Babe isa. liable to Ciara and Debrab. liable to Ciara, but not Debrac. liable to Debra, but not Ciarad. not liable to Ciara or Debra

c. liable to Debra, but not Ciara

Judith contracts with Ivan to fix her roof, and she writes Ivan a check, but he never makes the repairs. Ivan transfers the check to Hurtado, who knows that Ivan breached the contract, but decides to cash the check anyway. Hurtado can attain HDC status as toa. any defense Judith might have against paymentb. only any personal defense Judith might have against paymentc. only Ivan's breach, which is Judith's personal defense against paymentd. none of the choices

d. none of the choices

River contracts with Seb for monthly $2000 shipments of coffee to River's Flow, a Coffee Shop. River pays in advance with a $12000 note. One month later, Seb sells the note to Truly for $11000. When the note is sold, Sebastian isa. an HDC for $12000b. an HDC for $2000c. an HCD for $1000d. not an HDC

b. an HDC for $2000

Den opens an account at College Bank with a $4000 check drawn on another bank and payable to him. He indorses the check in blank. The bank credits his account and allows him to draw on the $4000 immediately. The bank knows of no defense to the check. The bank isa. an HDC to the extent that Den draws against the $4000 balanceb. an HDC for the full amount of the checkc. an HDC to the extend to any amount that is collected on the checkd. not an HDC

a. an HDC to the extent that Den draws against the $4000 balance

Teon signs a note that states, "Payable in thirty days." Ursa buys the note on the thrity-first day. Ursa is on notice that the notea. has been dishonoredb. is no longer negotiablec. is overdued. is payable immediately

c. is overdue

Joelle writes out a check payable to the order of Kristen.Kristen receives the check but wants to negotiate it further to her friend Lucas.. Kristen can negotiate the check further bya. delivery onlyb. indorsement onlyc. only delivery and indorsementd. neither delivery nor indorsement

c. only delivery and indorsement

Robin indorses a check "Pay to Highway Equipment Corporation if they deliver the backhoe by June 1, 2012." This indorsement isa. a blank indorsementb. a qualified indorsementc. a restrictive indorsementd. a special indorsement

c. a restrictive indorsement

Signature liability extends to any person who signs a negotiable instrument

True

Every party who signs an instrument is primarily liable for payment of it when it comes due

False

An authorized agent may be personally liable on an instrument on which the agent signs the agent's name but not the principal's name

True

Warranty liability does not bind parties who only present instruments for payment

False

An accommodation party has primary liability if he or she signs on behalf of a maker

True

Universal defenses can be raised to avoid payment to an HDC

True

A drawer can stop payment on a check in the possession of an innocent holder if the drawer was induced by an imposter to issue the check in the name of an impersonated payee

False

Personal defenses can be raised to avoid payment to an HDC

False

An unauthorized signature usually binds the person whose name is forged

False

A drawer is secondarily liable on an instrument

True

First National Bank is an HDC of a note for $1000 on which there is the signature "Gridley Addams." Gridley has a defense against payment on the note to the bank ifa. Gridley's signature was forgedb. the note was issued based on the false statements of another partyc. there was no consideration for issuing the noted. there was a breach of the contract for which the note was issued

a. Gridley's signature was forged

Rondel writes out a check for $50 to Samantha, who alters the amount to $500. Although the alteration is clearly visible, Timor cashes the check for $500. Rondel is liable to pay Timor fora. $50b. $500c. $550d. $0

d. $0

Debit Company writes a check to EZ that is drawn on Debit's account at First Federal Bank. If the bank does not accept the check, liability for its amount is ona. Debitb. EZc. First Federald. the party holding the draft

a. Debit

Farley signs a note payable to the order of Gabe. Gabe indorses the note and gives it to Heather as payment for a debt. heather presents it to Farley, who pays it. Farley's payment dischargesa. all of the partiesb. only Farleyc. only Gabed. only Heather

a. all of the parties

Mariena who cannot read English, signs a note after Nimrod tells her that it is a credit application. If later sued by an HDC, Mariena's best defense would bea. duressb. mistakec. fraud in the inducementd. fraud in the execution

d. fraud in the execution

Linwood writes a check to Maxime drawn of Linwood's account at Neighborly Bank. Maxime presents the check to the bank for payment. If the bank accepts the check, the bank isa. not liable for paymentb. primarily liable for paymentc. secondarily liable for paymentd. simultaneously liable for payment

b. primarily liable for payment

Jenna gives a $500 note to Keyton to deliver a load of fresh seafood to Jenna's store. On delivery, the seafood is spoiled. Jenna may defend her decision not to pay the note based ona. breach of warrantyb. fraud in the inducementc. lack of considerationd. undue influence

a. breach of warranty

Hamish writes a check on his account at Indigo Bank to Jada to pay a preexisting debt. Jada negotiates the check to Kendra by indorsement. Before Hamish or Jada may be liable on the check, it must bea. lost and unpaidb. presented for payment and dishonored, for which notice must be givenc. presented for payment and dishonored, without noticed. presented for payment and paid

b. presented for payment and dishonored, for which notice must be given

Giana writes a check on her account at Harbor Bay Bank to Itzak, a famous investor. The person purporting to be Itzak is an imposter, however, named Jeno. Jeno negotiates the check to the bank. Liability for the check is ona. Harbor Bay Bankb. Gianac. Itzakd. Jeno

a. Harbor Bay Bank

UPP authorizes Vitor to use company checks to buy plumbers' tools. Vitor writes a check to Wholesale Hardware for $100 over the price of a purchase, for which the seller returns cash. When Wholesale presents the check for payment, it may recovera. nothingb. the amount stated in the checkc. the amount of the overpayment onlyd. the price of the tools only

b. the amount stated in the check

A check is a draft drawn on a bank

True

If a bank fails to honor a customer's stop-payment order, it may be liable to the customer for more than the amount of the loss suffered by the drawer because of the wrongful payment

False

A bank's duty to honor its customer's checks is absolute

False

Generally, funds must be available on the next business day for cash deposits

True

A bank that fails to investigate an error and report its conclusion promptly to the customer is in violation of the Electronic Fund Transfer Act (EFTA)

True

A customer must examine the statements provided by the institution handling his or her account and notify it of any errors within sixty days

True

The rights and duties of a bank and its customers are contractual

True

All funds deposited in all bank accounts must be available for withdrawal no later than the next day

False

A bank that pays a customer's check bearing a forged indorsement must recredit the customer's account

True

A forged drawer's signature on a check is effective as the signature of the person whose name is signed

False

Fleet National Bank pays a check on which has been forged the signature of the drawer Gunhilde, who is the bank's customer. The bank must recredit her account for the entire amount of the check ifa. Gunhilde's negligence substantially contributed to the forgeryb. the amount of the check was less that $50c. the amount of the check was more than $5000d. the bank's negligence substantially contributed to the forgery

d. the bank's negligence substantially contributed to the forgery

Hometown Bank's cutoff hour is 2 pm. The bank receives a check drawn on the account of ITC, one of its customers, at 4 pm Monday, presented by Jaclyn, not a bank customer. The bank uses deferred posting. The bank may timely dishonor the check by midnighta. Mondayb. Tuesdayc. Wednesdayd. Thursday

c. Wednesday

Koko buys three television sets from Laszlo, paying with a check. When the sets prove defective, Koko orders Metro Bank, the drawee, to stop payment on the check. This order is valid for fourteena. yearsb. monthsc. weeksd. days

d. days

Newville Bank mistakenly pays one of Oswald's checks with a forged indorsement. Oswald can recover his loss from the bank if, after receipt of the bank statement, he notifies the bank within threea. yearsb. monthsc. weeksd. days

a. years

Jillian is the holder and payee of a check drawn by Kerri on Laramie Bank. Jillian takes the check to the bank to have it certified. After certificationa. Kerri is discharged on the checkb. Kerri is primarily liable on the checkc. the bank is discharged on the checkd. the bank is secondarily liable on the check

a. Kerri is discharged on the check

Pixie writes a check for $600 drawn on her account at Quest Bank and presents it to Rocco. When Rocco presents the check for payment, the bank dishonors it. Rocco may suea. the bank for dishonoring the checkb. Pixie on the underlying obligationc. both the bank and Pixied. none of the choices

b. Pixie on the underlying obligation

SSC issues a payroll check to Trevor drawn on its account at Unity Bank. This check will be stale if Trevor presents it for payment sixa. months after it's issuedb. months after he indorsesc. weeks after he receives itd. weeks after the pay period that it covers

a. months after it's issued

Regine issues a check to SDS in payment on her account. Tisha, SSD's accountant, forges the store's indorsement and deposits the check in her bank account. Urban Bank, Regine's bank, pays the check. Regine can recover froma. no oneb. Trisha, but not Urban Bankc. Urban Bank, which can recover from Trishad. urban Banks, which cannot recover from Trisha

c. Urban Bank, which can recover from Trisha

Devon loses his bank access card. He realizes his loss the next day but waits a week to call Estuary Bank, his bank. Meanwhile, Floria finds and uses Devon's card to withdraw $5000 from his account. Devon is responsible fora. $0b. $50c. $500d. $5000

c. $500

Web Funds, an e-money issues, may be subject to the Right to Financial Privacy Act if Web Fundsa. does not accept depositsb. does not hold customer funds, whether or not the funds qualify as "deposits"c. investigates its customers' credit backgroundsd. issues a physical card similar to a debit card

d. issues a physical card similar to a debit card

A signature can consist of a word, mark, or symbol

True

For an instrument to be negotiable, it must not contain an express promise or order to pay

False

A statement in an instrument that payment can be made only out of a particular fund or source renders it nonnegotiable

False

An instrument payable "with interest" must specify a particular rate to be negotiable

False

A person who receives an instrument as a gift normally becomes an ordinary holder

True

A holder does not take an instrument for value if he or she gives a negotiable instrument as payment

False

An instrument is not defective simply because it is overdue

False

A person who acquires a check stamped "insufficient funds" is put on notice and thereby acquires HDC status

False

A signature can be made by use of any device or machine

True

Transfer of an order instrument by indorsement and delivery extends warranty liability to any subsequent holder who takes the instrument in good faith

True

An ordinary holder can recover nothing on an instrument that has been materially altered

True

Discharge in bankruptcy is no defense on any instrument regardless of the status of the holder

False

A bank that encodes information on an item after the item has been issued warrants to any subsequent bank that the encoded information is correct

True

Bank customers cannot demand that their original canceled checks be returned with their monthly statement

True

CSC and RPC enter a contract for a sale of unprocessed silver. CSC draws a draft unconditionally ordering RPC to pay $50000 to CSC's order in 60 days. RPC signs and dates the draft. On this instrument, CSC is a. the bankerb. the drawerc. the makerd. the trader

b. the drawer

To obtain office supplies for DMC, Elmo executes a draft in favor of Flynn. A draft isa. a conditional promise to pay moneyb. an unconditional written order to pay moneyc. a qualified promise to set aside a sum of moneyd. a restricted promise to deliver goods at a future date

b. an unconditional written order to pay money

To finance the purchase of a house from Tuna, Uri signs an instrument promising to pay to VMS $160000 with interest in installments with the final payment due July 10, 2042. To be negotiable, this instrument must include the signature ofa. a non-party witnessb. Tuna or Tuna's realtorc. Urid. VMS's CFO

c. Uri

Ryan signs an instrument using an "R" with a circle around it. With this mark for a signature, the instrument isa. negotiableb. nonnegotiable, because an initial does not state the signer's namec. nonnegotiable, because this mark is a symbol, not a signatured. nonnegotiable, because a simple mark implies a lack of serious intent

a. negotiable

Karen writes on a peice of paper, "I owe you $600," signs it, and gives it to Lou. This instrument isa. negotiableb. nonnegotiable, because it doesn't include an express promise to payc. nonnegotiable, because it doesn't recite any considerationd. nonnegotiable, because it doesn't state any conditions to payment

b. nonnegotiable, because it doesn't include an express promise to pay

Kelly signs an instrument in favor of Leo that states it is "subject to a certain agreement between Kelly and Fiona." This instrument isa. negotiableb. nonnegotiable, because it is made subject to a separate agreementc. nonnegotiable, because it refers to a separate agreementd. nonnegotiable, because Kelly and Fiona are not the same person

b. nonnegotiable because it is made subject to a separate agreement

Hayley signs an instrument payable to the order of InstaCredit that allows a holder to demand payment of the entire amount due, with interest, if Hayley fails to make a payment. This instrument isa. negotiableb. nonnegotiable, because a holder can move up the payment datec. nonnegotiable, because moving up the payment date is conditionald. nonnegotiable, because the exact payment date cannot be determined from the face of the instrument

a. negotiable

Brad signs a promissory note payable to Theresa "with interest" on which he conspicuously notes that is it "nonnegotiable." This instrument isa. negotiableb. nonnegotiable, because it includes the notation "nonegotiable"b. nonnegotiable, because it doesn't specify a rate of interestc. nonnegotiable, because the exact amount payable cannot be determined from the face of the instrument

b. nonnegotiable, because it includes the notation "nonegotiable"

On May 1, Doug signs a check that is payable to the order of ECC and that is dated July 1. This check isa. negotiableb. nonnegotiable, because it is payable to a corporationc. nonnegotiable, because it is postdatedd. nonnegotiable, because it is signed by the drawer

a. negotiable

Ben transfers an instrument to Miguel in a form and by a means that makes Miguel a "holder." This isa. a holdingb. an assignmentc. negotiationd. presentment

c. negotiation

Petra signs a check payable to Quincy, who indorses the back, gives it to Regional Credit Union, and receives cash. The transfer of the check from Quincy to the credit union isa. an assignmentb. a negotiationc. a paymentd. a sale

b. a negotiation

Tiffany transfers a draft by signing it and delivering it to Uma. Tiffany isa. an indorserb. a draft dodgerc. a drafterd. a promisor

a. an indorser

Bob receives a payroll check from NCS, and indorses it by signing his name on the back of the check. This isa. blank indorsementb. qualified indorsementc. restrictive indorsementd. special indorsement

Blythe, an account for C&D, acquires a negotiable instrument from Eton by promising to pay its face value in 30 days. Blythe acquires the status of HDC when shea. acquires possession of the negotiable instrumentb. agrees with Eton to buy the negotiable instrumentc. pays the face value due on the instrumentd. transfers the instrument to another party

c. pays the face value due on the instrument

Jill makes a gift of a check to Kilroy who takes it in good faith and without notice of any claim, defense, or defect. with respect to this check, Kilroy isa. an extraordinary holder in due courseb. an ordinary check passerc. an ordinary holderd. an ordinary holder in due course

c. an ordinary holder

Jill, in good faith and for value, gets from Kit a check "payable to the order of bearer." Jill does not know that Kit stole the check. Jill isa. an HDCb. not an HDC, because Kit did not acquire the check for valuec. not an HDC, because Kit did not acquire the check in good faithd. not an HDC, because the check is a bearer instrument

a. an HDC

Ethel signs a note "payable to the order of Fidelity Bank." Fidelity indorses the note in blank and negotiates it to Ghani, who sells it to Huck. Liability associated with the transfer of the note from Ghani to Huck isa. fitnessb. qualityc. signatured. warranty

d. warranty

Dirk is the maker of a note, on which Erv is secondarily liable. FCC is the current holder of the note. Erv will be obligated to pay the note ifa. Dirk defaults on the noteb. FCC breaches a transfer warrantyc. FCC negotiates the note to a third partyd. FCC presents the note for payment

a. Dirk defauts on the note

Seymour writes a check on his account at Platinum Bank to Teri to pay a debt. Teri negotiates the check by indorsement to Rosanna, who presents it for payment to Onyx Bank. If Onyx Bank dishonors the check, Rosanna can obtain payment from Teria. if Rosanna timely notified Terib. only if Seymour refuses to pay the checkc. under any circumstancesd. under no circumstances

a. if Rosanna timely notifies Terri

Celia, an employee of DDC, forges the signature of Elin, DDC's president, on a DDC check and cashes it at First Federal Bank. Elin would ratify Celia's actions by a. asking First Federal to prosecute Celia for forgeryb. discharging Celia from DDC's employmentc. entering into a repayment agreement with Celiad. filing criminal charges against Celia herself

c. entering into a repayment agreement with Celia

Cash National Bank is an HDC of a note for $1000 on which there is the forged signature of "Dudley." If sued on the note by Casha. Dudley must pay the noteb. Dudley's best defense would be fraud in the executionc. Dudley's best defense would be material alterationd. Dudley's best defense would be forgery

d. Dudley's best defense would be forgery

DLY borrows $10000 at 6% interest from ELC and signs a promissory note for that amount. ELC changes the amount of the note to $120000 and increases the rate to 8%. ELC materially altered the note when it changeda. neither the amount nor the interest rateb. the amount and the interest ratec. the amount onlyd. the interest rate only

b. the amount and the interest rate

Doris convinces Dion, who does not understand English, to sign a $1000 note that Dion believes is an application for a credit card. Doris negotiates the note to EZ Finance Company. Diona. can avoid payment on the note even if EZ is an HDCb. can avoid payment on the note only if EZ is an HDCc. must pay EZ the amount that is paid for the noted. must pay the note in full

a. can avoid payment on the note even if EZ is an HDC

LAC gives a $3000 promissory note to MTFD to deliver a load of computer chips to LAC's plant. The chips are contaminated during transit and are useless to LAC on delivery. If MTFD presents the note for paymenta LAC's best defense would be breach of warrantyb. LAC must pay the notec. LAC's best defense would be nondelivery of an instrumentd. LAC's best defense would be failure of consideration

a. LAC's best defense would be breach of warranty

Rikki signs a check "pay to the order of Scholar University" drawn on Rikki's account in State Bank to pay for tuition. Rikki isa. the certifierb. the draweec. the drawerd. the payee

c. the drawer

First Community Bank agrees to accept a check by setting aside sufficient funds to cover the amount. This check is considereda. cashedb. certifiedc. depositedd. provisionally credited

b. certified

Darwin signs a check "pay to the order of Eva Marie" drawn of Darwin's account in First Funds Bank and dates the check "April 1." Eva Marie presents the check to the bank for payment on November 12. This isa. a stop-payment orderb. an overdraftc. a postdated checkd. a stale check

d. a stale check

Shakira issues a check drawn on Thrifty Bank to UOS to pay for six computer desks. later, Shakira discovers defects in the goods and orders Thrifty to stop payment on the check. Shakira doesn't renew the order, and the bank clears the check eight months later. The banka. must recredit Shakira's accountb. must obtain funds from UOS to cover the amount of the checkc. must substitute acceptable goodsd. need not recredit Shakira's account

d. need not recredit Shakira's account

Danny writes a check to Katie as payment for a DVD player but soon discovers the player is broken. He goes to the drawee bank and orally authorizes Sissy, a bank officer, to stop payment on the check. This order is valid fora. 14 daysb. 14 monthsc. 6 daysd. 6 months

a. 14 days

Brandy forges Caleb's signature on a check "payable to the order of Brandy" drawn on Caleb's account in Delphi Bank. Caleb's forged signature isa. effective if an innocent third party accepts the checkb. effective to the degree that it matches Caleb's genuine signaturec. effective to the extent that Downtown Bank debits Caleb's accountd. not effective

d. not effective

Elmer can write check on his account at Finance City Bank. Gina steals the checks, forges Elmer's signature, and cashes the checks at Finance City. The bank is excused from any liability if, after receipt of the first forged check, Elmer fails to report the forgeries withina. five daysb. fourteen daysc. one yeard. three years

c. one year

Roald writes a check for $700 to Savannah. Savannah indorses the check in blank and transfers it to Twitchell, who alters the check to read $7000 and present is to Union Bank, the drawee, for payment. The bank cashes it. Roald discovers the alteration and files a suit against the bank. Roald can recovera. $7000b. $6300c. $700d. $0

b. $6300

On Monday morning, Bob deposits into his account at Country Bank a $500 check from Dyna, who also has an account at Country Bank. On that same day, this check is considereda. chashieredb. certifiedc. paidd. provisionally credited

d. provisionally credited

Mike loses his National Bank access card. He realizes his loss the next day but waits a week to call National. Meanwhile, Opal finds and uses Mike's card to withdraw $3000 from Mike's account. Mike is responsible fora. $0b. $50c. $500d. $3000

c. $500

River contracts with Seb for monthly $2000 shipments of coffee to River's Flow, A Coffee Shop. River pays in advance with a $12000 note. One month later, Seb sells the note to Truly for $11000. When the note is sold, Seb is a. an HDC for $12000b. an HDC for $2000c. an HDC for $1000d. not an HDC

b. an HDC for $2000

Del opens an account at College Bank with a $4000 check drawn on another bank and payable to him. He indorses the check in blank. The bank credits his account and allows him to draw on the $4000 immediately. The bank knows of no defense to the check. The bank isa. an HDC to the extent that Del draws against the $4000 balanceb. an HDC for the full amount of the checkc. an HDC to the extent of any amount that is collected on the checkd. not an HDC